2014 (5) TMI 1144 - AT - Service Tax

CENVAT credit - consultancy and professional fees paid by the appellant to Chartered Accountants - Held that - It is also a settled law that the services rendered by the service provider can be classified in the hands of the jurisdictional authorities who are supposed to classify and reclassify the services rendered, the authorities at the recipient s end in this case reclassified the services rendered and denied the Cenvat credit - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Denial of Cenvat credit for consultancy and professional fees paid to Chartered Accountants.

Analysis:

Issue 1: Denial of Cenvat credit for consultancy and professional fees paid to Chartered Accountants

The case revolved around the denial of Cenvat credit taken by the appellant for consultancy and professional fees paid to Chartered Accountants. The Revenue contended that the services provided by the Chartered Accountants came under the Service Tax net from 1-3-2011, while the services were rendered between 2006-07 and 2009-10. The lower authorities denied the Cenvat credit based on this ground. However, it was argued that the Chartered Accountant clearly discharged the Service Tax liability under the services "Chartered Accountant Services." Additionally, it was established that the services rendered were in line with the manufacturing activities of the appellant, involving Sales Tax matters and banking facilities. The judgment highlighted that the authorities at the recipient's end reclassified the services rendered and wrongly denied the Cenvat credit, contrary to the established law that the classification of services should be done by the jurisdictional authorities. Consequently, the impugned order was deemed unsustainable and set aside.

This judgment underscores the importance of correctly classifying services for the purpose of claiming Cenvat credit. It emphasizes that the authorities must adhere to the established principles of classification and not arbitrarily deny credits based on incorrect interpretations. The ruling provides clarity on the treatment of services provided by professionals like Chartered Accountants in the context of Cenvat credit, ensuring that legitimate credits are not unjustly withheld.